Here’s a number that should bug you. About 50 million people in the US have limited or no access to local news, according to Northwestern University’s State of Local News Report. That’s a lot of towns where nobody’s watching the school board or the city budget.
So what do you do about it? For years, the go-to answer was grants. But on October 27, a group of big foundations tried something else. They backed a new local news investment fund that puts money into newsrooms and expects it to earn a return over time.
It’s small, honestly. Yet it could change how people think about paying for journalism, because it treats a local outlet as a business you can invest in.
So what’s actually in this local news investment fund?
Its official name is the Local News Impact Investment Fund. Social Finance, a Boston nonprofit that also works as a registered investment adviser, runs it. The fund starts with $21 million in commitments.
Two big names anchor it: the MacArthur Foundation and the Knight Foundation. Press Forward, a local news funding initiative with more than 40 place-based chapters, and Social Finance itself are in too. Nobody has shared how much each partner put in, though.
So how big are the checks? Most deals will land between $500,000 and $2 million. Both nonprofit and for-profit outlets can qualify, as long as they’re independent. According to Axios, the goal is to grow the pot to $30 million to $35 million over the next two years.
Social Finance will find the deals and do the due diligence (that’s the homework investors do before handing over money). It’ll also track each newsroom’s financial health next to its reach and engagement. The focus is on communities with the least access to local news.
Why invest in newsrooms instead of just giving grants?
Grants are great, but they run out. Then a newsroom is back to asking for more. According to Social Finance, outlets also struggle to get financing to test new ideas and grow them.
That’s where impact investing comes in. In plain words, it’s money that aims for a social result and a financial return at the same time. “It’s effectively a more patient, more flexible, more risk-tolerant form of investing,” said MacArthur’s John Balbach.
This is also MacArthur’s first financial investment in local news through its impact investing program. It draws on the foundation’s $750 million pool of catalytic capital. Catalytic capital is money that’s willing to take more risk, so other investors feel safer joining later.
Knight’s leaders sound just as fed up with the old model. “It’s not only grants or bust,” said Maribel Pérez Wadsworth, Knight’s president and CEO. “Philanthropy alone cannot meet the scale of the challenge facing local news organizations,” said Knight’s Amalie Nash.
What can a newsroom actually do with the money?
The fund wants to back growth projects. Social Finance lists upgrading digital platforms, testing new business models that bring in more revenue, and expanding into new regions, audiences or topics.
In a piece for Editor & Publisher, the Social Finance team gave a few examples. The money could support digital advertising, events, membership pricing and targeted newsletters. It’s also meant to sit next to grants, so it won’t replace them.
There’s a bar to clear, though. Newsrooms need a sustainable business model in the works, a clear read on their local market and readers, and a believable path to revenue growth and profitability.
Picture a small-town outlet with loyal readers but no paid newsletter. In theory, an investment could cover the cost of launching one. If it works, the newsroom earns more and investors see a return. If it doesn’t, that’s the risk patient capital signs up for.
Okay, but will this actually work?
Honestly? Nobody knows yet. Axios noted that the model is still unproven, and that’s fair. Social Finance is upfront that returns aren’t guaranteed either.
The size is modest too. Press Forward has pledged at least $500 million, mostly in grants, and it’s already invested more than $400 million. Next to that, $21 million looks tiny. The fund also can’t grow faster than it can responsibly put money to work.
Still, we think the experiment matters more than the dollar amount. If even a handful of newsrooms show they can take investment and grow, other investors will have proof. That’s how many new markets begin: a few patient backers go first, then the rest follow.
“Local news is the backbone of informed, connected communities,” said Kirstin Hill, president and COO of Social Finance. We’d add one thing. A backbone also needs a business model that can stand on its own.
Why this matters outside the US, too
You might be thinking, nice, but this is an American story. Sure. But the core question travels well: what happens when a mission-driven organization outgrows grants?
That’s the same question behind blended finance, where public or philanthropic money takes the first risk so private money can follow. It also fits a pattern we’ve seen across the wider impact investing market, since investors keep asking for proof that impact and returns can live together.
For us at EIF, the lesson feels familiar. Grants can get something started, but a lasting organization needs a model that pays for itself. A fund like this tests that idea in one of the toughest sectors around.
Here’s a practical takeaway if you run a small media project anywhere. Investors will ask the same things this fund asks: who reads you, how you earn money, and how you plan to grow. So it’s smart to have those answers ready, even if you’re living on grants today.
So, should you care about this local news investment fund?
If you read local news, yes. If you invest, or run a mission-driven organization, probably even more. This local news investment fund is a small bet with a big question behind it: can journalism pay its own way if someone gives it time?
Here’s what we’ll watch over the next year. First, which newsrooms get the first checks. Next, whether the fund actually reaches its $30 million to $35 million goal. Finally, whether those newsrooms can show real revenue growth, because that’s the proof every other investor will want to see.
And here’s our open question for you. Which other “charity” sectors in your community could run like a business if they got patient capital instead of one-off grants?